For those people whose financial circumstances are not going to change in any way, and there is no hope that they will be able to pay off their debts in the near future, Personal Bankruptcy is the best solution. It is a legal way which helps them to come out of that unwanted circumstance. Personal bankruptcy and debt that can’t be paid back have some legal solution for the person who is facing this situation.
When somebody announces himself as bankrupt, most of his unsecured debts are written off, allowing him to start everything afresh. But personal bankruptcy rules mean you will face certain restrictions.
Basics of Bankruptcy
As far as any individual is concerned, in Australia, personal bankruptcy and debt are controlled by the Bankruptcy Act 1966.
Once a person is declared bankrupt, he needs to give up all control over his finances and assets to a Trustee. This legal procedure protects him from legal actions, which could have been taken by a person or organization who had given him credit loans. The law protects the person and his personal assets from many adverse situations, while at the same time enables the creditors to recover some part of the given loans legally.
Minimum amount that you need to owe
One can announce himself as bankrupt anytime, no matter how much he or she owes. However, a creditor can make a person bankrupt only when the minimum bad credit loans amount to $5000 in Australia.
Consequences after being bankrupt
· Once a person is announced bankrupt, his all unsecured creditors will stop contacting him to recover the loans. This will also be relevant for joint debts and the amount the person owes to his family or friends.
· Legal actions with respect to unsecured loans will be stopped.
· If any unsecured creditors continue to contact the bankrupt person, then he can bring it to the notice of the trustee.
However, there are some kinds of existing debts which the bankrupt person needs to pay back, which include:
· Various penalties and fines already existing and imposed by the court.
· Damages from accidents which the bankrupt person is directed to pay by the court.
· Student’s loan
· Utility bills
· Additional debts incurred after your bankruptcy.
Bankruptcy protected property
The entire matter of Personal Bankruptcy and debt is controlled by Australian Financial Security Authority (AFSA) who appoints a trustee on behalf of the bankrupt person. AFSA normally excludes the following properties and assets from being ceased or sold by the creditors- For more info, check out Debt Mediators.
· Tools used for generating income.
· Normal household assets like TV, Refrigerator, Kitchen Appliances and furniture, etc.
· Cars and Motorbikes up to a certain wholesale price.
· Superannuation funds and life insurance values.
· Compensation for a personal injury.
· Awards achieved personally.
· Any property in custody of the bankrupt person on behalf of someone else.
Life after being Bankrupt
Bankruptcy affects a person adversely, but he still has many options while bankrupt. He always has the opportunity to start everything newly. On certain financial matters, such as to get any credit in the future or to get an employment, he will find himself in a disadvantageous position. However, everything normalizes with time if proper action is taken. Get more details here https://www.debtmediators.com.au/bankruptcy/.